<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CIVIC BANCORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 6, 1999
To the Shareholders of Civic BanCorp:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Civic
BanCorp will be held at 2101 Webster Street, 1st Floor, Oakland, California on
May 6, 1999 at 4:00 p.m., for the following purposes:
1. Electing directors to serve for ensuing year;
2. Approving the adoption of the Employee Stock Purchase Plan;
3. Approval of the extension of the 1995 Non-Employee Director Stock Option
Plan and an increase in the number of shares reserved for issuance under
the Plan;
4. Ratification of the Board of Directors' selection of KPMG LLP as
independent accountants for the year 1999; and
5. Transacting such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on March 9, 1999 has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting or any adjournment thereof.
Whether or not you plan to attend the meeting, you may vote by completing,
signing and returning the enclosed proxy card promptly. Your proxy card may be
revoked at any time prior to the time it is voted.
By Order of the Board of Directors
Herbert C. Foster
President and Chief Executive
Officer
April 2, 1999
(Approximate mailing date of proxy materials)
Place and Time of Annual Meeting
2101 Webster Street, 1st Floor
Oakland, California 94612
4:00 p.m.
<PAGE>
PROXY STATEMENT
OF
CIVIC BANCORP
2101 Webster Street
Oakland, California 94612
Annual Meeting of Shareholders
May 6, 1999
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Civic BanCorp (the "Company"), a
California corporation, for use at the Annual Meeting of Shareholders to be
held on May 6, 1999 at 4:00 p.m. at 2101 Webster Street, 1st floor, Oakland,
California, and any adjournment thereof. These proxy materials were mailed to
shareholders on or about April 2, 1999.
PURPOSE OF THE MEETING
The meeting is to be held for the purpose of:
1. Electing thirteen (13) directors (the entire Board of Directors).
2. Approving the adoption of the Employee Stock Purchase Plan.
3. Approval of the extension of the 1995 Non-Employee Director Stock Option
Plan and an increase in the number of shares reserved for issuance under
the Plan.
4. Ratifying the selection of KPMG LLP as independent public accountants
for the year 1999.
5. Acting upon such other business as may properly come before the meeting
or any adjournment thereof.
GENERAL PROXY STATEMENT INFORMATION
Revocability of Proxies
Any shareholder giving the enclosed proxy has the right to revoke it at any
time before it is exercised by filing with the Company's Secretary, Amy
Haggerty, a written notice of revocation or by presenting at the meeting a
duly executed proxy bearing a later date. A shareholder may also revoke the
proxy by attending the meeting and electing to vote in person before any vote
is taken.
Solicitation of Proxies
This proxy solicitation is made by the Board of Directors of the Company and
the cost of the solicitation is being borne by the Company. Solicitation is
being made by this Proxy Statement and may also be made by employees of the
Company who may communicate with shareholders or their representatives in
person, by telephone or by additional mailings in connection with proxies,
although no employee will be specifically engaged for that purpose.
Outstanding Securities and Voting Rights
As of March 9, 1999, the Company had 4,528,749 shares of common stock, no
par value, issued and outstanding, held by approximately 1,100 shareholders.
Only those shareholders of record of the Company's
<PAGE>
common stock as of the record date, March 9, 1999 will be entitled to notice
of and to vote in person or by proxy at the meeting or any adjournment
thereof, unless a new record date is set for an adjourned meeting.
Each share of common stock is entitled to one vote at the annual meeting,
except with respect to the election of directors. In elections for directors,
California law provides that a shareholder, or his or her proxy, may cumulate
votes; that is, each shareholder has a number of votes equal to the number of
shares owned, multiplied by the number of directors to be elected, and the
shareholder may cumulate such votes for a single candidate, or distribute such
votes among as many candidates as he or she deems appropriate. However, a
shareholder may cumulate votes only for a candidate or candidates whose names
have been properly placed in nomination prior to the voting, and only if the
shareholder has given notice at the meeting, prior to the voting, of his or
her intention to cumulate votes for the candidates in nomination. The proxy
holders are given, under the terms of the proxy, discretionary authority to
cumulate votes represented by shares for which they are named proxy.
In the election of directors, the thirteen (13) candidates receiving the
highest number of votes will be elected. The approval of Proposal Two to adopt
the Company's employee stock purchase plan and Proposal Three to extend the
non-employee director stock option plan requires the affirmative vote of
holders of a majority of the shares of Civic BanCorp's common stock
represented and voted at the meeting. The affirmative votes must also
constitute a majority of the required quorum. Ratification of the selection of
KPMG LLP as independent public accountants requires the affirmative vote of a
majority of the issued and outstanding shares of common stock represented at
the meeting. Broker non-votes, (i.e. shares held by brokers or nominees which
are represented at the meeting but with respect to which the broker or nominee
is not authorized to vote on a particular proposal), are counted as present
for determining whether a quorum is present. In determining whether a proposal
has received the requisite number of affirmative votes, abstentions will have
the effect of a negative vote and broker nonvotes will be disregarded and have
no effect on the outcome of the vote.
If the enclosed proxy is completed in the appropriate spaces, signed, dated
and returned, the proxy will be voted as specified in the proxy. If no
specification is made, it will be voted FOR the election of directors
nominated by management, FOR adoption of the Employee Stock Purchase Plan, FOR
the approval of the extension of the 1995 Non-Employee Stock Option Plan and
an increase in the number of shares reserved for issuance under the Plan, FOR
ratification of KPMG LLP as independent public accountants, and will be voted
on such other matters as may come before the meeting at the discretion of the
proxy holders.
Management of the Company is not aware of any other matters to come before
the meeting, and recommends that the shareholders vote FOR the election of the
directors nominated by management, FOR adoption of the Company's employee
stock purchase plan, FOR extension of the 1995 non-employee director stock
option plan and FOR ratification of KPMG LLP as independent public
accountants.
2
<PAGE>
Principal Shareholders
No persons are known to management to have, directly or indirectly, more
than 5% of the Company's issued and outstanding shares of common stock as of
March 9, 1999 other than as follows:
<TABLE>
<CAPTION>
Amount of Percent of
Name and address of beneficial owner beneficial ownership class
------------------------------------ -------------------- ----------
<S> <C> <C>
C. Donald Carr............................... 864,829 19.1%
1001 Dry Creek Road
Napa, CA 94558
Paul R. Handlery............................. 368,742 8.1%
c/o Handlery Hotels
180 Geary Street
San Francisco, CA 94108
Franklin Securities.......................... 263,709 5.8%
777 Mariners Island Boulevard
San Mateo, CA 94404
Dimensional Fund Advisors, Inc............... 243,230 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
Proposals of Shareholders
Under certain circumstances, shareholders are entitled to present proposals
at shareholders' meetings, provided that the proposal is submitted in a timely
manner and in a form that complies with applicable regulations. For any such
shareholder proposal to be included in the proxy statement to be prepared for
next year's annual meeting, the shareholder must submit the proposal prior to
December 4, 1999 in a form that complies with applicable regulations.
Submission of a proposal does not guarantee its inclusion in a proxy statement
or its presentation at a shareholder meeting. Shareholder proposals are
subject to regulation under Federal securities laws.
Compliance With Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1998 all Section
16(a) filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with.
3
<PAGE>
1. PROPOSAL ONE
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be not
less than eleven (11) nor more than twenty (20). By resolution the Board of
Directors has fixed the number of directors at thirteen (13).
Nominees to the Board of Directors
The procedure governing nominations for election to the Board of Directors
is set forth in Sections 3.19 and 3.20 of the Bylaws, which provide as
follows:
Section 3.19. NOMINATIONS FOR ELECTION OF DIRECTORS. Nominations for
election of members of the Board of Directors may be made by the Board of
Directors (or the nominating committee of the Board of Directors) or by any
holder of any outstanding class of capital stock of the corporation
entitled to vote for the election of Directors. Notice of Intention to make
any nominations (other than by the Board of Directors or its nominating
committee) must be made in writing and be delivered or mailed to the
President of the corporation by the later of the close of business: (i) 90
days prior to any meeting of shareholders at which Directors will be
elected or (ii) in case of an annual meeting of shareholders, not later
than 90 days before the anniversary of the previous year's annual meeting.
Such notification must contain the following information to the extent
known to the notifying shareholder: (a) the name and address of each
proposed nominee; (b) the principal occupation of each proposed nominee;
(c) the number of shares of capital stock of the corporation owned by each
proposed nominee; (d) the name and residence address (or business address,
if the notifying shareholder is not a natural person) of the notifying
shareholder; (e) the number of shares of capital stock of the corporation
owned by the notifying shareholder; (f) the number of shares of capital
stock of any bank, bank holding company, savings and loan association or
other depository institution owned beneficially by the nominees and by the
notifying shareholder and the identities and locations of any such
institutions; (g) whether the proposed nominee has ever been convicted of
or pleaded nolo contendere to any criminal offense involving dishonesty or
breach of trust, filed a petition in bankruptcy or been adjudged bankrupt;
and (h) a statement regarding the nominee's compliance with Article Three,
Section 3.20 of these Bylaws. The notification shall be signed by the
nominating shareholder and by each nominee, and shall be accompanied by a
written consent to such nomination from each proposed nominee. Nominations
not made in accordance with these procedures shall be disregarded by the
Chairman of the meeting, and upon his instructions, the inspectors of the
election shall disregard all votes cast for each such nominee. The
foregoing requirements do not apply to the nomination of a person to
replace a proposed nominee who has become unable to serve as a Director
between the last day for giving notice in accordance with this paragraph
and the date of election of Directors if the procedure called for in this
paragraph was followed with respect to the nomination of the proposed
nominee. A copy of Article Three, Section 3.19 of these Bylaws will be
provided to any shareholder upon receipt of a written request thereof,
addressed to the President of the corporation.
Section 3.20. QUALIFICATIONS OF DIRECTORS. No person shall be a member of
the Board of Directors (a) who is a director, officer, employee, agent,
nominee, attorney or other representative for any other financial
institution, lender or bank holding company, or affiliate or subsidiary
thereof, engaged in business or that proposes to engage in business,
directly or through any parent company, subsidiary or affiliate, in
California or Nevada, or (b) who has, or has been or is the nominee of
anyone who has, any contract, arrangement or understanding with any other
financial institution, lender or bank holding company, or affiliate or
subsidiary thereof, engaged in business or that proposes to engage in
business, directly or through any parent company, subsidiary or affiliate,
in California or Nevada, or with any officer, director, employee, agent,
nominee, attorney or other representative thereof, pursuant to which he or
she will disclose or in any way utilize information obtained as a director
for purposes other than for the benefit of this corporation or that he or
she will, directly or indirectly, attempt to effect or encourage any action
of this corporation for the benefit of any person or entity other than this
corporation, or (c) who has not owned at
4
<PAGE>
least $1,000 fair market value of the corporation's Common Stock for at least
90 days prior to the date of his or her election as a director.
Subparagraph (c) shall not apply to an individual hired by the corporation's
Board of Directors to be President and Chief Executive Officer of this
corporation until such time as that individual has been employed by the
corporation for a period of two years.
The Board of Directors of this corporation or a committee thereof, shall make
the determination whether any person who seeks to become a director complies
with the provisions of this Section 3.20.
Each of management's nominees to the Board of Directors of the Company has
served as a director of the Company and its subsidiary CivicBank of Commerce
("Bank") since 1984 except Herbert C. Foster, who was appointed in March,
1993, Wayne S. Doiguchi who was appointed in May, 1998 and John E. Lindstedt,
who is nominated for the first time.
The 13 persons named below will be nominated for election as directors to
serve until the next Annual Meeting and until their successors are duly
elected and qualified. Votes by the Company's proxy holders will be cast in
such a way as to effect the election of all nominees or as many as possible
under the rules of cumulative voting. If any nominee should become unable or
unwilling to serve as a director, the proxies will be voted for such
substitute nominees as shall be designated by the Board of Directors. The
Board presently has no knowledge that any of the nominees will be unable or
unwilling to serve. There are no family relationships among any of the
nominees for director or any of the executive officers of the Company.
The following list of directors provides information with respect to each
person nominated and recommended to be elected by the current Board of
Directors of the Company. Reference is made to the section "Security Ownership
of Management" for information pertaining to stock ownership of the nominees.
<TABLE>
<CAPTION>
Director
Name Age Since Business Experience During Past Five Years
---- --- -------- --------------------------------------------
<C> <C> <C> <S>
David L. Cutter 70 1984 Former Chairman of Cutter Laboratories,
Inc.; Director of CHAD Therapeutics, Inc.;
member of American Institute of Certified
Public Accountants.
Edward G. Mein 69 1984 Owner of Mein Investment Co., a real estate
management, development and lending company.
Edward G. Roach 60 1984 President of ER Development, a real estate
development firm.
Paul R. Handlery 78 1984 Chairman and Chief Executive Officer of
Handlery Hotels, Inc. of San Francisco,
California, a hotel, real estate and
investment management firm.
James C. Johnson 65 1984 Chairman of JAE Properties, Inc., a real
estate broker, property manager, developer
and syndicator.
Dale D. Reed 67 1984 Chairman and Chief Executive Officer of
Buran & Reed, Inc., a diversified investment
company; member of the San Leandro Planning
Commission, and a past president and current
trustee of the San Leandro Scholarship
Foundation; director of Goodwill Industries
of East Bay; chairman of the San Leandro
Industrial Roundtable.
Barclay Simpson 77 1984 Chairman of Simpson Manufacturing Co., Inc.,
a manufacturer of construction products;
owner of Barclay Simpson Fine Arts Gallery
in Lafayette; director of Calendar-Robinson
Insurance Co. San Francisco; former director
and president of the Bay Area Rapid Transit
District (BART); trustee of the California
College of Arts and Crafts and the
University Art Museum, Berkeley.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Director
Name Age Since Business Experience During Past Five Years
---- --- --------- ------------------------------------------
<C> <C> <C> <S>
C. Donald Carr 67 1984 Chairman of the Company since July, 1995;
owner of The Carr Company, a real estate
brokerage and development business.
Herbert C. Foster 59 1993 President and Chief Executive Officer of
the Company and Chairman and Chief
Executive Officer of the Bank since March,
1993; President and Chief Executive
Officer of Pacific Bay Bank, San Pablo, CA
during 1992 and President of University
National Bank & Trust Company, Palo Alto,
CA from 1983 to 1991.
John W. Glenn 70 1984 Founder, consultant and retired CEO of
John Glenn Adjusters and Administrators,
Inc.; former director and president of San
Francisco Bay Area Rapid Transit District
(BART); member President's Counsel,
Southeast Missouri State University; past
president of California Association of
Independent Insurance Adjusters.
Paul C. Kepler 55 1984 President of The Kepler Co., a private
investment firm; former Chief Executive
Officer of LINC Capital Corporation, an
equipment leasing and real estate
financing company from 1986 to 1993; owner
of the Seascape Sports Club; director of
the United States Tennis Association
(USTA)--Northern California Section.
Wayne S. Doiguchi 49 1998 President and CEO of Park Investment
Company, a venture capital company since
1993; President of Japanese American
Chamber of Commerce; Board of Trustees,
Yu-Ai-Kai, Community Senior Service; Board
of Directors, Community Youth Service.
Board of Directors, San Jose Sports
Authority.
John E. Lindstedt 64 (nominee) President of the Bank from February, 1994
through January 1999; formerly with Wells
Fargo Bank, N.A., San Francisco since
1965; Executive Vice President in capacity
of senior lending officer of Corporate
Banking Group from 1988 to 1994.
</TABLE>
The enclosed proxy will be voted in favor of the election of the above-named
nominees as directors, unless authority to vote for directors is withheld. If
any of the nominees should be unable or decline to serve, which is not
anticipated, discretionary authority is reserved for the proxy holders to vote
for a substitute, to be designated by the present Board of Directors. In the
event that additional persons are nominated as directors, the proxy holders
intend to vote all the proxies received by them in such manner in accordance
with cumulative voting as will assure the election of as many of the nominees
listed above as possible and, in that event, the specific nominees to be voted
for will be determined by the proxy holders in their sole discretion.
Certain Committees of the Board of Directors
The Board of Directors of the Company has an Audit Committee, composed of
John W. Glenn (Chairman), David L. Cutter, Paul R. Handlery and James C.
Johnson. The Audit Committee met seven times in 1998 for the purpose of
reviewing overall operations of the Company. As part of its duties, the Audit
Committee examines the results of the financial statements and reports
prepared by the Company's independent auditors and makes recommendations
thereon to the Board of Directors.
The Board of Directors of the Company has a Strategic Options Committee
whose members in 1998 were Edward G. Roach (Chairman), C. Donald Carr, Wayne
S. Doiguchi and Barclay Simpson. The Strategic Options Committee met four
times in 1998 to consider strategic alternatives available to the Company.
6
<PAGE>
The Board of Directors of the Company has a Personnel Committee whose
members in 1998 were Barclay Simpson (Chairman), David L. Cutter, James C.
Johnson, and Paul C. Kepler. The Personnel Committee met four times in 1998 to
consider the hiring and compensation of officers and employees of the Company
and the Bank. The Personnel Committee acted as Stock Option Committee under
the Stock Option Plan and in this capacity granted stock options under the
Stock Option Plan to officers and other employees. The Personnel Committee
also functions as the compensation committee and as the nominating committee
in connection with the election of directors. The Personnel Committee will
consider nominees recommended by shareholders if such recommendations are
accompanied by a complete biographical and financial statement of the nominee
in such form as the Personnel Committee shall require and, for a
recommendation made in connection with an annual meeting of shareholders, the
recommendation is submitted by November 30 of the preceding year.
The Board of Directors of the Bank has an Audit Committee and Personnel
Committee. These committees consist of the same members as indicated above for
the Company and met the same number of times. Each committee had duties at the
Bank level similar to those for committees of the Company.
In addition, the Board of Directors of the Bank has a Directors' Loan
Committee composed of Dale D. Reed (Chairman), C. Donald Carr, Herbert C.
Foster, Paul R. Handlery, Edward G. Mein, Paul C. Kepler and Edward G. Roach.
This committee met twenty-four times in 1998. The function of the Directors'
Loan Committee is to review certain loans and recommend ratification, when
appropriate, to the Board of Directors, and in certain cases to review and
approve or disapprove loan applications when the amount requested is above
certain thresholds or the applicant is affiliated with the Company or the
Bank. The members of the Directors' Loan Committee also serve as the members
of the Risk Management Committee. The Risk Management Committee met twelve
times in 1998 and is responsible for monitoring the Bank's investment
activities and the overall interest rate risk profile.
Neither the Company nor the Bank has a separate compensation committee or
nominating committee; the Personnel Committee of each serves these functions.
Meetings of the Board of Directors
The Board of Directors of the Bank met in 1998 in regular meetings for a
total of nine meetings. The Board of Directors of the Company held nine
regular meetings during 1998. No nominee for director, while serving as a
director of the Bank and the Company during 1998, attended fewer than 75% of
the total number of meetings of the Board and of the committees of which he
was a member.
Director Fees
In 1998 the Bank paid fees to non-employee directors for their services as
directors. The payment schedule provides for non-employee directors to be paid
a quarterly retainer of $2,500 with the Chairman to receive $3,000 per
quarter. Additionally, $3,000 per year will be paid to each director if the
Company achieves the business plan and such amounts were paid to the Directors
for 1998 and 1997. Chairmen of the Audit, Loan and Personnel Committees were
paid an additional $350 per committee meeting attended. Committee members were
paid $250 per meeting attended. Directors who were executive officers were not
paid director fees in 1998. Total director fees paid in 1998 were $145,400.
7
<PAGE>
Executive Officers
The following are the names of the principal executive officers of the
Company and the Bank and certain information concerning each of them:
<TABLE>
<CAPTION>
Name and Age Business Experience During Past Five Years
------------ --------------------------------------------------------
<C> <S>
Herbert C. Foster, 59 President and Chief Executive Officer of the Company and
Chairman and Chief Executive Officer of the Bank since
March, 1993; President and Chief Executive Officer of
Pacific Bay Bank, San Pablo, CA during 1992 and
President of University National Bank & Trust Company,
Palo Alto, CA from 1983 to 1991.
John E. Lindstedt, 64 President of the Bank from February, 1994 through
January 1999; formerly with Wells Fargo Bank N.A. San
Francisco since 1965; Executive Vice President in the
capacity of senior loan officer of Corporate Banking
Group from 1988 to 1994. Mr. Lindstedt retired as
President on January 31, 1999.
Arnold T. Grisham, 52 President of the Bank since January, 1999; formerly with
Wells Fargo Bank since 1981; Executive Vice President
since 1994 and Division Manager, National Financial
Services since 1997.
George McCullagh, 50 Executive Vice President of the Bank since September
1998; Senior Vice President and Statewide Commercial
Sales Manager for Bank of America from 1989 to 1998;
Vice President and Statewide Commercial Sales Manager
for Wells Fargo Bank from 1981 to 1989.
</TABLE>
Security Ownership of Directors and Management
The following table sets forth the number of the Company's common shares
owned, as of March 9, 1999, by the present directors who are also among
management's nominees for reelection, by the sole nominee who is not currently
a director, by executive officers and by the directors, nominees and officers
of the Company as a group:
Shares of Common Stock Beneficially Owned
<TABLE>
<CAPTION>
Percent of
Name of Beneficial Owner Number(1) Class
------------------------ --------- ----------
<S> <C> <C>
C. Donald Carr.................................... 873,679(2) 18.60%
David L. Cutter................................... 22,237(3) .47
Wayne S. Doiguchi................................. 4,200(4) .09
Herbert C. Foster................................. 166,747(5) 3.55
John W. Glenn..................................... 36,840(6) .78
Paul R. Handlery.................................. 371,817(7) 7.92
James C. Johnson.................................. 35,056(8) .75
Paul C. Kepler.................................... 34,344(9) .73
John E. Lindstedt................................. 72,586 1.55
Edward G. Mein.................................... 83,869(10) 1.79
Dale D. Reed...................................... 58,731(11) 1.25
Edward G. Roach................................... 31,008(12) .66
Barclay Simpson................................... 87,719(13) 1.87
All directors, nominees and officers as a group
(15 persons)..................................... 1,892,401 40.29%
</TABLE>
- --------
(1) Includes all shares beneficially owned, whether directly or indirectly,
individually or together with associates. Includes any shares owned,
whether jointly or as community property with a spouse and any
8
<PAGE>
shares of which beneficial ownership may be acquired within 60 days of
March 9, 1999 by the exercise of stock options.
(2) Includes 864,829 shares held by Mr. Carr jointly with his spouse and
8,850 shares which may be acquired within 60 days of March 9, 1999 by the
exercise of stock options.
(3) Includes 8,850 shares which may be acquired within 60 days of March 9,
1999 by the exercise of stock options.
(4) Includes 4,000 shares which may be acquired within 60 days of March 9,
1999 by the exercise of stock options.
(5) Includes 78,150 shares which may be acquired within 60 days of March 9,
1999 by the exercise of stock options.
(6) Includes 23,907 shares held by Mr. Glenn jointly with his spouse, 4,083
shares held in trust, John W. Glenn, Trustee, and 8,850 shares which may
be acquired within 60 days of March 9, 1999 by the exercise of stock
options.
(7) Includes 272,225 shares held by Handlery Hotels, Inc. and 3,075 shares
which may be acquired within 60 days of March 9, 1999 by the exercise of
stock options.
(8) Includes 26,206 shares held by Mr. Johnson jointly with his spouse, 2,925
shares held by his spouse of which 151 are held by her as custodian under
the California Uniform Gift to Minors Act, and 8,850 shares which may be
acquired within 60 days of March 9, 1999 by the exercise of stock
options.
(9) Includes 8,850 shares which may be acquired within 60 days of March 9,
1999 by the exercise of stock options.
(10) Includes 75,019 shares held by Mr. Mein jointly with his spouse and 8,850
shares which may be acquired within 60 days of March 9, 1999 by the
exercise of stock options.
(11) Includes 49,881 shares held by Mr. Reed jointly with his spouse and 8,850
shares which may be acquired within 60 days of March 9, 1999 by the
exercise of stock options.
(12) Includes 6,379 shares held in trust, Edward G. Roach, Trustee and 8,850
shares which may be acquired within 60 days of March 9, 1999 by the
exercise of stock options.
(13) Includes 78,869 shares held by Mr. Simpson jointly with his spouse and
8,850 shares which may be acquired within 60 days of March 9, 1999 by the
exercise of stock options.
Change in Control
Management is not aware of any arrangements, including the pledge by any
person of shares of the Company, the operation of which may at a subsequent
date result in a change in control of the Company.
9
<PAGE>
Executive Compensation
The following table sets forth the compensation of the named executive
officers for each of the Company's last three fiscal years whose total annual
cash compensation exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
----------------------------
Long Term
Name and Principal Compensation All Other
Position Year Salary Bonus (1) Options Compensation(2)
- ------------------ ---- ----------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Herbert C. Foster....... 1998 $190,000.00 $130,700.00 None $125,526.52
President and Chief 1997 190,000.00 94,000.00 21,000 shs. 122,718.52
Executive Officer of 1996 190,000.00 71,014.00 None 17,486.96
the Company and Chairman
and Chief Executive
Officer of the Bank
John E. Lindstedt....... 1998 160,000.00 58,135.00 None 25,149.00
President of the Bank 1997 160,000.00 51,700.00 10,500 shs. 22,340.80
1996 160,000.00 35,507.00 None 9,183.40
George P. McCullagh..... 1998 44,064.00 21,140.00 25,000 shs. 110.00
Executive Vice
President
(From September 1998)
</TABLE>
- --------
(1) Represents cash bonus in year earned.
(2) Represents Company contributions to the Profit Sharing Retirement Plan,
Company matching contributions under the 401(k) Plan, imputed value of
life insurance premiums paid by the Company, and for Mr. Foster, the
expense associated with a deferred compensation plan of $101,198.52 in
1998 and 1997.
The Company pays the cost of premiums on life insurance policies insuring
all employees, including executive officers, in amounts approximating two
times their annual salaries. The policies are payable to the officers'
designated beneficiaries. A portion of the premium paid by the Bank is imputed
as income for tax purposes for the executive officers. Such amounts are
included in the compensation table above.
Pursuant to a deferred compensation agreement dated December 1, 1996 between
Mr. Foster and the Bank, Mr. Foster is entitled to salary continuation
benefits of $100,000 per year for 15 years commencing at retirement or if
there is a change in control as defined within the agreement. The benefit
vests at the rate of 20% per year commencing after the fifth through ninth
years unless there is a change in control at which time the benefit is 100%
vested.
Messrs. Foster and Lindstedt receive automobile allowances in connection
with the performance of their duties. Mr. Foster also has a club membership
paid by the Bank in connection with the performance of his duties. Management
is unable to determine, without unreasonable effort and expense, the extent or
value of the personal benefit, if any, which might be derived from these
payments, and the value of any such benefits is not included in the amounts
set forth above. It is management's opinion that such benefits have not been
material in amount and did not exceed 10% of salary and bonus for Mr. Foster.
10
<PAGE>
The following table summarizes all stock options granted executive officers
in 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Rates of Stock
Price
Appreciation
Individual Grants for Option Term
---------------------------------------- ---------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Granted Exercise
to Employees or Base
Options in Fiscal Price Expiration
Name Granted Year ($/Sh) Date 5%($) 10%($)
- ---- ------- ------------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
George P. McCullagh... 25,000 25.2% $14.00 2008 220,000 558,000
</TABLE>
The following table summarizes the number of exercisable and unexercisable
options held by the named officers at December 31, 1998.
Aggregated Options/Exercises in Last Fiscal Year
and Fiscal Year End Options Values
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of unexercised
unexercised in-the-money
options at options
12-31-98 at 12-31-98
Shares acquired Value realized Exercisable/ Exercisable/
Name on exercise(#) ($) unexercisable unexercisable
- ---- --------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Herbert C. Foster....... 10,000 $126,607 88,700/27,300 $656,916/$122,225
John Lindstedt.......... 5,000 41,488 23,350/8,400 160,150/20,303
George McCullagh........ None None 0/25,000 0/0
</TABLE>
Incentive Reserve/Bonus Plan
The Bank has an Incentive Reserve/Bonus Plan for its vice presidents and
higher ranking officers (19 persons as of December 31, 1998), including
Messrs. Foster, Lindstedt and McCullagh. The Bank paid bonuses of $391,254
under this plan for 1998.
Profit Sharing Retirement Plan
The Board of Directors of the Bank has adopted a Profit Sharing Retirement
Plan ("PSRP") available to all employees. The PSRP is intended to provide a
tax-deferred compensation and savings vehicle to its participants, and has
been ruled by the Internal Revenue Service to comply with requirements for the
deductibility of contributions for tax purposes. The PSRP provides for three
types of contributions: voluntary contributions by employees; partial matching
contributions on a percentage basis determined by the Bank (set at 50% for
1998); and profit-sharing contributions by the Bank at the discretion of its
Board of Directors based on earnings of the Bank. The Board did allocate a
profit sharing contribution of 4.00% of net income to the PSRP for 1998.
Employee contributions are fully vested at all times. Employees become
vested in profit-sharing contributions and Bank matching contributions at a
rate of 20% per year beginning two years after employment. Contributions are
paid to a trustee which receives and pays funds, safeguards and values trust
assets, invests trust funds and carries out the directions of the
Administrative Committee. The trustee under the PSRP is Wells
11
<PAGE>
Fargo Bank. The Administrative Committee consists of members appointed by the
Board of Directors and acts as administrator of the PSRP. The committee may
retain an investment manager or other advisors as it considers necessary to
discharge its duties.
The trustees and the Administrative Committee are subject to fiduciary
duties imposed on them by the Employee Retirement Income Security Act of 1974
(ERISA) and the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).
Participants may begin receiving benefits under the PSRP upon reaching age 59
1/2, or earlier upon a showing of hardship. A participant may elect to receive
benefits in a lump sum, in installments, as an annuity providing for
guaranteed income for a period certain or in any combination of the foregoing
methods. Company contributions credited in 1998 to the PSRP for the benefit of
the named executive officers are included in the summary compensation table
under the column entitled "All Other Compensation."
Transactions with Directors and Officers
The Bank has had in the ordinary course of business, and expects to have in
the future, banking transactions with certain of its directors, officers,
shareholders, and their associates, including transactions with corporations
of which such persons are directors, officers or controlling shareholders. In
the opinion of management, such transactions involving loans have been and
will be entered into with such persons in accordance with applicable laws and
(1) in the ordinary course of business (2) on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and (3) on terms not involving
more than the normal risk or collectability or presenting other unfavorable
features. For additional reference see Note 11 to the Consolidated Financial
Statements for the year ended December 31, 1998 attached to and a part of
Civic BanCorp Form 10-K for fiscal year ended December 31, 1998, and included
in the Company's Annual Report to Shareholders.
Compensation Committee Report
The Compensation Committee in accordance with applicable requirements has
provided the following report to the Board of Directors of the Company.
REPORT ON EXECUTIVE COMPENSATION
BY THE PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS
The Report of the Personnel Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the information contained in the report by
reference, and shall not otherwise be deemed filed under such acts.
The Company's executive compensation is recommended by the Personnel
Committee and approved by the Board of Directors. The Committee usually meets
a minimum of three times per year. Salaries are reviewed and determined at the
Committee meeting in January. Any increases are approved by the Board of
Directors and are effective March 1. Incentive bonus awards are also reviewed
and determined at the same meeting. Stock options are generally awarded in
January. Compensation for a newly-hired executive may be established by the
Committee at a special meeting.
The compensation policy of the Company is designed to attract and retain
highly qualified personnel and to provide meaningful incentives for measurable
performance. The components of executive compensation include base salary, an
incentive bonus plan, non-plan bonuses, profit sharing contributions and stock
options.
The Company's general compensation strategy for executive officers including
the Chief Executive Officer is to pay annual and long term compensation which
is competitive with other executives compensation of peer group companies,
adjusted for the Company's financial condition and performance relative to
that peer group. In
12
<PAGE>
determining compensation levels, the Company obtains salary survey information
regarding executive salary levels for comparable companies through many
sources, including banking industry associates, published surveys and
independent compensation consultants.
The Company has an annual incentive bonus plan for executives and certain
officers based on achieving certain financial performance goals, primarily the
return on assets, which are established by the Personnel Committee and
approved by the Board of Directors as part of the annual budgeting process.
Other criteria used to determine incentive awards include asset quality and
earnings results. The Board also considers professional experience and past
and potential future contributions to the Company. Each executive's percentage
of an incentive bonus pool is at the discretion of the CEO and is payable
subject to satisfactory performance and contingent on approval of the Board of
Directors after the calendar year is complete. The maximum amount any
participant can earn from the incentive bonus plan is equal to or less than
100% of the participant's base salary.
In 1996, 1997 and 1998, based upon the Company's return on assets, incentive
plan bonuses were paid for those years. The size of the bonus pool is directly
tied to improvements in the Company's return on assets capping at a 1.70 ROA.
The total cash compensation including cash bonuses paid to the Company's
executive officers for 1996, 1997 and 1998 ranked just below average for the
total cash compensation paid to executive officers for banks in our asset size
in California.
Executive officers are permitted to participate in other Company and Bank
employee benefit plans including the Profit Sharing Retirement Plan.
Long term incentive awards consisting of stock options are considered to be
a substantial portion of the compensation package of the executive officers
and provide incentive to increase shareholder value. There were no stock
options awarded in 1996. In 1997, stock options were awarded to Mr. Foster and
Mr. Lindstedt, and in 1998, stock options were awarded to Mr. McCullagh.
Barclay Simpson, Chairman
Paul C. Kepler
David L. Cutter
James C. Johnson
Personnel Committee Interlocks and Insider Participation
No member of the Personnel Committee is a former or current officer or
employee of the Company or its subsidiaries.
13
<PAGE>
Performance Graph
The following graph compares the stock performance of the Company to the
performance of a specific industry index, the SNL Securities L.P. Northern
California (less than) $1 Billion Independent Bank Proxy and to the Standard &
Poor's 500 index over the past five calendar year period. The Nasdaq Bank Stock
Index is also included and will be used as an industry index in the future
because it includes a broader range of bank stock and is more readily available.
COMPARISON OF STOCK PERFORMANCE
AMONG CIVIC BANCORP, NASDAQ US MARKETS, NASDAQ BANK STOCKS
AND (LESS THAN) $1B INDEPENDENT BANKS
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Civic BanCorp............ 100.0 102.3 139.5 190.7 362.8 255.8
Nasdaq US Markets........ 100.0 97.8 138.3 170.0 208.6 293.2
Nasdaq Bank Stocks....... 100.0 99.6 148.4 195.9 328.0 324.9
Less than $1B Independent Banks... 100.0 94.7 131.0 193.6 344.6 309.8
</TABLE>
14
<PAGE>
2. PROPOSAL TWO
ADOPTION OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted the CivicBank of Commerce Employee Stock
Purchase Plan (the "Purchase Plan") and has directed that the Purchase Plan be
submitted to a vote of the stockholders at the Annual Meeting. If approved by
the stockholders, the Purchase Plan will become effective September 1, 1999.
On March 9, 1999, the closing sale price reported on The Nasdaq Stock Market
for a share of the Common Stock was $13.50 (as reported by the National
Quotation Bureau, Inc.).
Purpose
The purpose of the Purchase Plan is to provide eligible employees with an
opportunity to acquire a proprietary interest in the Company through the
purchase of its Common Stock and, thus, to develop a stronger incentive to
work for the continued success of the Company. The Purchase Plan is an
employee stock purchase plan under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").
Administration
The Purchase Plan will be administered by a Committee appointed by the Board
of Directors (the "Committee"). Subject to the provisions of the Purchase
Plan, the Committee is authorized to determine any questions arising in the
administration, interpretation and application of the Purchase Plan, and to
make such uniform rules as may be necessary to carry out its provisions.
Eligibility and Number of Shares
Up to 100,000 shares of Common Stock of the Company are available for
distribution under the Purchase Plan, subject to appropriate adjustments by
the Committee in the event of certain changes in the outstanding shares of
Common Stock by reason of stock dividends, stock splits, corporate
separations, recapitalizations, mergers, consolidations, combinations,
exchanges of shares or similar transactions. Shares delivered pursuant to the
Purchase Plan may be acquired by purchase for the accounts of participants on
the open market or in privately negotiated transactions by a registered
securities broker/dealer selected by the Company.
Any employee of the Company or, subject to approval by the Board of
Directors, a parent or subsidiary corporation of the Company (including
officers and any directors who are also employees) will be eligible to
participate in the Purchase Plan for any Purchase Period (as defined below) so
long as, on the first day of such Purchase Period, the employee has completed
at least 12 months of continuous service. The first "Purchase Period" under
the Plan will begin on September 1, 1999 and conclude on December 31, 1999.
Thereafter a "Purchase Period" means a semi-annual period of the year,
beginning on January 1 or July 1 and concluding on June 30 and December 31,
respectively.
Any eligible employee may elect to become a participant in the Purchase Plan
for any Purchase Period by filing an enrollment form in advance of the
Purchase Period to which it relates. The enrollment form will authorize
payroll deductions beginning with the first payday in such Purchase Period and
continuing until the employee modifies his or her authorization, withdraws
from the Purchase Plan or ceases to be eligible to participate.
No employee may participate in the Purchase Plan if such employee would be
deemed for purposes of the Code to own stock possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company.
The Company currently has approximately 87 employees who are eligible to
participate in the Purchase Plan.
15
<PAGE>
Participation
An eligible employee who elects to participate in the Purchase Plan will
authorize the Company , prior to the commencement of a Purchase Period to make
payroll deductions of a specified fixed dollar amount or whole percentage from
1% to 20% of the employee's gross cash compensation as defined in the Purchase
Plan. A participant may, prior to the start of any succeeding Purchase Period,
direct the Company to increase or decrease the amount of deductions (within
those limits) or make no further deductions, as set forth in greater detail in
the Purchase Plan. A participant may also elect to withdraw from the Purchase
Plan at any time before the end of a Purchase Period. In the event of a
withdrawal, all future payroll deductions will cease and the amounts withheld
will be paid to the participant in cash within 30 days. Any participant who
stops payroll deductions may not thereafter resume payroll deductions for that
Purchase Period, and any participant who withdraws from the Purchase Plan will
not be eligible to reenter the Purchase Plan until the next succeeding
Purchase Period.
Amounts withheld under the Purchase Plan will be held by the Company as part
of its general assets until the end of the Purchase Period and then applied to
the purchase of Common Stock of the Company as described below. No interest
will be credited to a participant for amounts withheld.
Purchase of Stock
As of the last day of each Purchase Period, the amounts withheld for a
participant in the Purchase Plan will be used to purchase shares of Common
Stock of the Company. The purchase price of each share will be equal to 85% of
the Fair Market Value (as defined in the Purchase Plan) of a share of Common
Stock on the last day of the Purchase Period. All amounts so withheld will be
used to purchase the number of shares of Common Stock (including fractional
shares) that can be purchased with such amounts at such price, unless the
participant has properly notified the Company that he or she elects to receive
the entire amount in cash. If some or all of such shares are acquired for the
accounts of participants on the open market or in privately negotiated
transactions, the Company will provide to the Agent such funds, in addition to
the funds available from participants' payroll deductions, as may be necessary
to permit the Agent to purchase that number of shares (including brokerage
fees and expenses).
No more than $10,000 of a Participant's payroll deductions will be used to
purchase shares of Common Stock, under the Purchase Plan and all other
employee stock purchase plans, if any, of the Company and any parent or
subsidiary corporation of the Company by any participant for each calendar
year.
If purchases by all participants would exceed the number of shares of Common
Stock available for purchase under the Purchase Plan, each participant will be
allocated a ratable portion of such available shares. Any amount not used to
purchase shares of Common Stock will be refunded to the participant in cash.
Shares of Common Stock acquired by each participant shall be transferred to
Participant in the form of a certificate or credited to a brokerage account
established at Participant's expense. No certificates for fractional shares
will be issued and cash representing any fractional shares shall be carried
forward and applied in subsequent Offerings.
Death, Disability, Retirement or Other Termination of Employment
If the employment of a participant terminates for any reason, including
death, disability or retirement, the amounts previously withheld will be
returned to the participant or beneficiary, as the case may be.
Rights Not Transferable
The rights of a participant under the Purchase Plan are exercisable only by
the participant during his or her lifetime. No right or interest of any
participant in the Purchase Plan may be sold, pledged, assigned or transferred
in any manner other than by will or the laws of descent and distribution.
16
<PAGE>
Amendment or Modification
The Board of Directors may at any time amend the Purchase Plan in any
respect which shall not adversely affect the rights of participants pursuant
to shares previously acquired under the Purchase Plan, provided that approval
by the stockholders of the Company is required to increase the number of
shares to be reserved under the Purchase Plan (except for adjustments by
reason of stock dividends, stock splits, corporate separations,
recapitalizations, mergers, consolidations, combinations, exchanges of shares
and similar transactions).
Termination
All rights of participants in any offering under the Purchase Plan will
terminate at the earlier of (i) the day that participants become entitled to
purchase a number of shares of Common Stock equal to or greater than the
number of shares remaining available for purchase or (ii) at any time, at the
discretion of the Board of Directors. Upon termination of the Purchase Plan,
shares of Common Stock will be purchased for participants in accordance with
the terms of the Purchase Plan, and cash, if any, previously withheld and not
used to purchase Common Stock will be refunded to the participants.
Federal Tax Considerations
The following discussion is intended to provide an overview of the U.S.
federal income tax laws which are generally applicable to the Purchase Plan as
of the date of this Proxy Statement. People or entities in differing
circumstances may have different tax consequences, and the tax laws may change
in the future. This discussion is not to be construed as tax advice.
Payroll deductions under the Plan will be made on an after-tax basis.
Participants will not recognize any additional income as a result of
participation in the Plan until the disposition of shares acquired under the
Plan or the death of the Participant. Participants who hold their shares for
more than 24 months after the start of the Purchase Period or die while
holding their shares will recognize ordinary income in the year of disposition
or death equal to the lesser of (i) the excess of the fair market value of the
shares on the date of disposition or death over the purchase price paid by the
participant or (ii) the excess of the fair market value of the shares on the
last day of the Purchase Period over the purchase price paid by the
participant. If the 24-month holding period has been satisfied when the
participant sells the shares or if the participant dies while holding the
shares, the Company will not be entitled to any deduction in connection with
the transfer of such shares to the participant.
Participants who dispose of their shares within 24 months after the shares
were purchased will be considered to have realized ordinary income in the year
of disposition in an amount equal to the excess of the fair market value of
the shares on the date they were purchased by the participant over the
purchase price paid by the participant. If such dispositions occur, the
Company generally will be entitled to a deduction at the same time and in the
same amount as the participants who make those dispositions are deemed to have
realized ordinary income.
Participants will have a basis in their shares equal to the purchase price
of their shares plus any amount that must be treated as ordinary income at the
time of disposition of the shares. Any additional gain or loss realized on the
disposition of shares acquired under the Purchase Plan will be capital gain or
loss.
The Board of Directors recommends a vote FOR approval of Proposal Two.
17
<PAGE>
3. PROPOSAL THREE
EXTENSION OF 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
AND INCREASE THE NUMBER OF SHARES RESERVED UNDER THE PLAN
The Board of Directors is submitting to the shareholders for approval a
proposal to (i) extend the Company's Non-Employee Director Stock Option Plan
(the "Plan") for two years from its current expiration date of March 1999 to
March 2001, and (ii) increase the number of shares for which options may be
granted under the Plan from 115,500 to 165,500. The extension of the 1995 Plan
will enable directors who are not officers or employees of the Company or any
subsidiary of the Company ("Eligible Directors") to continue to be eligible to
receive stock options. The increase in the number of shares reserved will
allow the Company to attract and retain qualified persons to serve as
directors. A brief summary of the Plan is set forth below. The proposal is
subject to approval by the Company's shareholders holding a majority of the
issued and outstanding shares represented and entitled to vote at the annual
meeting.
The Board believes the success of the Company depends largely on its
continued ability to attract and retain directors with relevant and beneficial
experience who are motivated to exert their best efforts on behalf of the
Company. The Board believes that a program that permits the grant of stock
options to Eligible Directors will promote the long term financial success of
the Company by further aligning the interests of Eligible Directors with the
interests of the Company and its shareholders.
Participants
The Plan provides that options be granted only to Eligible Directors.
Eligible Directors are all members of the Company's Board of Directors who are
not officers or employees of the Company or of any of its subsidiaries or
affiliates.
Administration of the Plan
The Plan is and will continue to be administered, construed and interpreted
by the Board of Directors, or at the option of the Board of Directors, by a
committee (the "Committee") which shall be comprised of three or more members
of the Board appointed by the Board. The Committee shall prescribe the form of
stock option agreement to be used to evidence grants of Options under the
Plan, consistent with the terms of the Plan and all applicable laws and
regulations, including, without limitation, Rule 16b-3 (or successor
provisions) promulgated by the Securities and Exchange Commission.
Number of Shares Subject to the Plan
At present, options to purchase 107,500 shares have been granted under the
Plan. The current maximum that may be granted under the Plan is 115,500,
leaving 8,000 options currently available for grant. The maximum number of
shares with respect to which options may be granted and which are hereby
reserved for purposes of the Plan shall be increased by 50,000 to 165,500
shares. Shares issued under the Plan may be either authorized but unissued
shares or shares which have been or may be reacquired by the Company. Shares
released upon forfeiture of an Option shall again be available for grants of
future options.
In the event shares are changed into or exchanged for a different kind or
number of shares of stock or securities of the Company as a result of any
stock dividend, stock split, combination of shares, exchange of shares,
merger, consolidation, reorganization, recapitalization or other change in
capital structure, then the number of shares subject to the Plan and to
Options granted will be equitably adjusted to prevent the dilution or
enlargement of Options.
When the Company first adopted the Plan, it reduced the number of shares for
which options could be granted under its other stock option plan (the 1994
Stock Option Plan) by 115,500 shares to offset the effect of reserving shares
under the Plan. The Board intends to reduce the number of shares for which it
will consider granting options under the 1994 Plan by an additional 50,000.
The current figure is 817,000, the reduced figure would be 767,000. This
reduction will be effected through the administration of the 1994 Plan rather
than by a
18
<PAGE>
formal amendment. As a result, the aggregate number of shares for which
options may be granted under the Company's stock option plans will not
increase by reason of extension of the Plan and the increase in the reserved
shares under the Plan.
Option Grants
The price at which Shares may be acquired pursuant to Options, (the
"Exercise Price") will be the Fair Market Value of the Shares as defined in
the Plan, as of the date on which each option is granted. All options under
the Plan will be non-qualified stock options. The following is a summary of
existing options and the impact of new options to be granted if the proposal
is approved.
<TABLE>
<CAPTION>
Expected Stock Options
Stock Options Granted if Proposal is
Granted Under Approved
Existing ----------------------
Director Plan 1999 2000
------------- ----------- -----------
<S> <C> <C> <C>
David L. Cutter........................ 10,350 1,500 1,500
Edward G. Mein......................... 10,350 1,500 1,500
Edward G. Roach........................ 10,350 1,500 1,500
Paul R. Handlery....................... 10,350 1,500 1,500
James C. Johnson....................... 10,350 1,500 1,500
Dale D. Reed........................... 10,350 1,500 1,500
Barclay Simpson........................ 10,350 1,500 1,500
C. Donald Carr......................... 10,350 1,500 1,500
John W. Glenn.......................... 10,350 1,500 1,500
Paul C. Kepler......................... 10,350 1,500 1,500
Wayne S. Doiguchi...................... 4,000 1,500 1,500
John E. Lindstedt (Nominee)............ -- 4,000 1,500
------- ----------- -----------
Total Options.......................... 107,500 20,500 18,000
</TABLE>
The Board has no current plans for granting the remaining 11,500 additional
options that the proposal provides.
Exercise Rights
An Option granted under the Plan cannot be exercised for a period of six
months after the date of grant. Thereafter, subject to certain limitations,
the option will be fully vested. In the event that the optionee ceases to be
an Eligible Director within six months of the date an Option is granted, the
Option will be forfeited. Any Option not exercised within five years from the
date of the grant will terminate. An Option will terminate if it is not
exercised within the following periods after termination of the optionee's
Eligible Director status: (1) one year when termination of Eligible Director
status is caused by death or disability; or (2) three months after of director
status for any other reason. In the event of the optionee's death, only the
optionee's heirs, or legal representatives shall have the right to exercise
the Optionee's Option.
Restrictions on Transfers
The Plan and Options granted under the Plan are subject to all applicable
Federal and state laws, rules and regulations and to such approvals or
governmental agency which may be necessary. No Options may be granted or
exercised under the Plan unless and until all applicable legal requirements
have been complied with. The Company shall not be required to deliver any
shares under the Plan prior to (i) the admission of such Shares to listing on
any stock exchange on which Shares may them be listed and (ii) the completion
of such registration or other qualifications of such shares under any state of
Federal law, rule or regulation.
19
<PAGE>
Termination
If the proposal is approved and the Plan is extended, it will terminate on
March 15, 2000. If the Plan is not extended, the Plan will terminate on March
15, 1999. The Board of Directors may suspend or terminate the Plan at any
earlier time. Upon termination of the Plan, no additional options shall be
granted under the Plan. However the terms of the Plan shall continue in full
force and effect with respect to outstanding and unexercised options issued
under the Plan.
Amendment
The Board of Directors may amend the Plan from time to time in its sole
discretion, without shareholder approval, provided that no amendment shall (a)
materially modify the requirements as to eligibility for participation in the
Plan; (b) materially increase the aggregate number of shares with respect to
Options granted under the Plan or which may be granted to any Eligible
Director; or (c) materially increase the benefits accruing to Eligible
Directors under the Plan.
Federal Tax Aspects
The principal Federal income tax consequences of the Plan to participants
and to the Company are set forth below.
Options under the Plan are nonqualified stock options for Internal Revenue
Code purposes. The grant of nonqualified stock options does not result in
any taxable income to the participant or any tax deduction to the Company.
Upon the exercise of a nonqualified stock option, the excess of the market
value of the shares acquired over their cost to the participant is taxable
to the participant as ordinary income and is deductible by the Company. The
participant's tax basis for the shares is their fair market value at the
time of exercise. Income realized on the exercise of a nonqualified stock
option is subject to Federal and (where applicable) state and local
withholding taxes. The Company has the right to require the Eligible
Director to pay, or make arrangements satisfactory to the Company, for the
payment of any taxes that become due in connection with the exercise of any
Option.
The Board of Directors recommends a vote FOR approval of Proposal Three
4. PROPOSAL FOUR
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has served as the Company's independent certified public
accountants since 1994. The Company engaged KPMG LLP as its independent public
accountants by letter dated June 14, 1994 between KPMG LLP and the Audit
Committee of the Board of Directors. The Company has had no disagreements with
its accountants with respect to accounting principles or practices of
financial statement disclosure.
At the 1999 Annual Meeting of Shareholders the following resolution will be
subject to ratification by a simple majority vote of shares represented at the
meeting:
RESOLVED, that the selection of KPMG LLP as the independent certified
public accountants of Civic BanCorp and its subsidiary, CivicBank of
Commerce, for the fiscal year ending December 31, 1999 is hereby ratified.
If ratification is not achieved, the selection of an independent certified
public accountant will be reconsidered and made by the Board of Directors.
Even if selection is ratified, the Board of Directors reserves the right and,
in its discretion, may direct the appointment of any other independent
certified public accounting firm at any time if the Board decides that such a
change would be in the best interests of the Company and its shareholders.
20
<PAGE>
The services provided by KPMG LLP include the examination and reporting of
the financial status of the Company and Bank. These services have been
furnished at customary rates and terms. There are no existing direct or
indirect agreements or understandings that fix a limit on current or future
fees for these audit services.
A representative of KPMG LLP is expected to attend the 1999 Annual Meeting
of Shareholders with the opportunity to make a statement, if desired, and is
expected to be available to respond to shareholders' inquiries.
The Board of Directors recommends a vote FOR approval of Proposal Four.
5. OTHER BUSINESS
If any other matters come before the meeting, not referred to in this Proxy
Statement, including matters incident to the conduct of the meeting, the proxy
holders will vote the shares represented by proxies in accordance with their
best judgment. Management is not aware of any other business to come before
the meeting and, as of the date of the preparation of this Proxy Statement, no
shareholder has submitted to management any proposal to be acted upon at the
meeting.
Additional Information and Documents Incorporated by Reference.
Each shareholder has received the Company's 1998 Form 10-K as filed with the
Securities and Exchange Commission containing financial statements, including
the report of its independent public accountants.
21
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Civic BanCorp
Proxy for the Annual Meeting of Shareholders to Be Held
The undersigned hereby appoints Paul R. Handlery, Edward G. Roach and C.
Donald Carr, and each of them, Proxies, with the full power of substitution to
vote all of the stock of the undersigned at the Annual Meeting of Shareholders
of Civic BanCorp to be held on May 6th, 1999 at 4:00 p.m. at 2101 Webster
Street, 1st floor, Oakland, California, and at any adjournment thereof, in the
manner indicated and in their discretion on any other business which may
properly come before said meeting, all in accordance with and as more fully
described in the Notice and accompanying Proxy Statement for said meeting,
receipt of which is hereby acknowledged. The share represented by this Proxy
shall be voted as specified below.
(Continued, and to be marked, dated and signed, on the reverse side)
- --------------------------------------------------------------------------------
* FOLD and DETACH HERE *
<PAGE>
This proxy will be voted as directed. In the absence of contrary directions,
this proxy will be voted FOR the election of the directors listed above and FOR
proposals 2,3 and 4.
Please mark
[X] your votes
as this
1. ELECTION OF DIRECTORS:
FOR the election as WITHHOLD authority (as
Directors of all nominees. [_] to all nominees listed [_]
Instruction: To withhold authority to vote for any individual nominee(s), strike
a line through that nominee's name in the list below:
C. Donald Carr, David L. Cutter, Wayne S. Doiguchi, Herbert C. Foster, John W.
Glenn, Paul R. Handlery, James C. Johnson, John E. Lindstedt, Paul C. Kepler,
Edward G. Mein, Dale D. Reed, Edward G. Roach and Barclay Simpson.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Approving the adoption of the Employee
Stock Purchase Plan. [_] [_] [_]
3. Approval of the extension of the 1995 Non- I plan to
Employee Director Stock Option Plan and an attend the
increase in the number of shares reserved meeting.
for issuance under the Plan. [_] [_] [_] [_]
4. Ratification of selection of KPMG Peat
Marwick, LLP as independent accountants
for 1999. [_] [_] [_]
5. OTHER MATTERS. In their discretion, upon such other matters as may properly come before the meeting; at this time the Board of
Directors is not aware of any other matters that will be presented. If no direction is given, this Proxy will be voted for the
election of nominees set forth above, approving the adoption of the Employee Stock Purchase Plan, approval of the extension of
the 1995 Non-Employee Director Stock Option Plan and an increase in the number of shares reserved for issuance under the Plan and
for the ratification of the selection of KPMG Peat Marwick, LLP.
</TABLE>
PLEASE DATE AND RETURN IN THE ENCLOSED ENVELOPE.
Signature(s)_________________________________________________ Date _____________
Please sign exactly as your name appears above. When signing as a custodian for
a minor, executor, administrator, attorney, trustee or guardian please give your
full title as such.
- --------------------------------------------------------------------------------
* FOLD and DETACH HERE *
